Pension Mode SMSF
When you start a Transition to Retirement income stream (a pension while you still work), there are certain minimum amounts to withdraw. The maximum amount is 10% of the account balance.
Depending on your age, you must withdraw a minimum amount from your Account based Pension each year. Due to the economic effects of COVID-19, the government has halved the percentage of minimum pension payments for the 2020, 2021, 2022 and 2023 financial years.
See the table below for percentages linked with different age categories:
| Age of recipient | Percentage Factor (2020/2021/2022/2023) |
| Under 65 | 2% |
| 65 – 74 | 2.5% |
| 75 – 79 | 3% |
| 80 – 84 | 3.5% |
| 85 – 89 | 4.5% |
| 90 – 94 | 5.5% |
| 95 or more | 7% |
With the global financial crisis in 2009, the minimum percentages were lowered. This enabled Members to preserve more capital in the SMSF. The historical minimum percentages are set out below:
| Age | Previous Year Percentage Factors | |||
| 2008 FY | 2009 -2011 FY | 2012-2013 FY | 2014-2019 FY | |
| Under 65 | 4% | 2% | 3% | 4% |
| 65-74 | 5% | 2.5% | 3.75% | 5% |
| 75-79 | 6% | 3% | 4.5% | 6% |
| 80-84 | 7% | 3.5% | 5.25% | 7% |
| 85-89 | 9% | 4.5% | 6.75% | 9% |
| 90-94 | 11% | 5.5% | 8.25% | 11% |
| 95 or more | 14% | 7% | 10.5% | 14% |
1. The 4% minimum is the normal percentages that apply for minimum pension draw down
2. Minimum amount calculated on 1 July each year for the transition to retirement regular payment
3. In the first year of the account-based income stream, work out the minimum payment pro-rata on effective days in the year
4. Minimum amount to be rounded to nearest $10
5. These minimum amounts are set out in the Superannuation Legislation
To start a Pension or Transition to Retirement, Trustees need to minute this decision. Please see a template of a pension commencement minute below
To read more on Pension payments from an SMSF, read the ATO booklet here: